The impact of blockchain technology on anti-money laundering and counter-terrorism financing management by financial institutions

• Autor(a) principal: Cabral, Sofia Antunes da Silva
• Data de Publicação: 2019
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/19391
• topic: Blockchain; Anti-money laundering and counter-terrorism financing; Financial Institutions; Innovation; Prevenção do branqueamento de capitais e financiamento do terrorismo; Instituições financeiras; Inovação; Gestão da inovação; Crime económico -- Economic crime; Combate ao crime -- Fighting crime; Sistema tecnológico

Money laundering and financing of terrorism are serious criminal offences that contribute to the parallel economy and harm the overall society wellbeing, as they generate further crime. The ever-evolving technological field makes it so that ML/FT schemes are becoming increasingly complex and dynamic, hindering the efforts conducted by regulators and authorities to suppress these events. Financial institutions, being an attractive vehicle for this type of criminal offences, also play an important role in fighting ML/FT. Hence, financial entities must ensure adequate controls and procedures to comply with the prevailing AML/CFT legislation. Blockchain technology first arose in the context of cryptocurrencies. However, its inherent characteristics and flexibility make it suitable for numerous areas, including the financial services industry. The goal of this dissertation is to assess the overall impact of the adoption of blockchain based solutions by financial institutions in compliance with AML/CFT legal requirements, particularly when the use case directly affects the AML/CFT process. Moreover, a comprehensive academic research was conducted to gain an in-depth understanding of both topics beforehand. Due to the lack of quantitative data available, literature review alongside with practical know-how were the basis used to reach the conclusions. The results show that the impact of the adoption of blockchain based solutions by financial institutions on AML/CFT management is positive in the context of private or hybrid networks. Public blockchains, on the other hand, are not compliant with AML/CFT standards. Nonetheless, legislation on the matter is required and each use case must be addressed independently.